INDIA TYRE-MAKERS STOP SIGNING FRESH NATURAL RUBBER IMPORT DEALS ON CHEAPER LOCAL SUPPLY-DEALERS

INDIA TYRE-MAKERS STOP SIGNING FRESH NATURAL RUBBER IMPORT DEALS ON CHEAPER LOCAL SUPPLY-DEALERS

By Rajendra Jadhav
MUMBAI, Dec 3 (Reuters) - Indian tyre-makers have stopped signing new natural rubber import deals as they are getting the raw material more than 15 percent cheaper in the local market, two dealers and one trade official told Reuters.
India, the world's fourth-biggest rubber producer, imports mainly from Thailand, Malaysia and Indonesia.
"They (tyre-makers) are aggressively buying in the domestic market due to cheaper supplies," said a dealer based in Kochi in southern state of Kerala, the biggest producing state in the country.
On Firday, spot price of the most traded RSS-4 rubber (ribbed smoked sheet) was 197 rupees ($4.36) per kilogramme (kg) in India as against 203 rupees ($4.5) per kg in Bangkok.
In the past one month, spot rubber price in India has risen by 1 percent, while that in the international market rose by 9 percent.
"Rubber is at least 15 percent cheaper in Indian market if you add import duty and freight charges, and calculate landed cost of imported rubber," George Valy, president of The Indian Rubber Dealers Federation, told Reuters.
India charges 20 percent import duty on natural rubber.
In August, Indian rubber makers were charging a premium of as much as 35 rupees per kg over the Bangkok market, prompting Indian tyre companies to sign imports deals aggressively for shipment in September to December.
"Now the scenario is exactly the opposite. No one is signing import deals. Still we are getting rubber from old contracts. That will continue for next one month, but if the scenario remains the same, imports will be very low in January to March period," said another dealer based in Kerala.
The country has imported to 143,468 tonnes of natural rubber in April-Nov, up 3 percent on year due to lower-than-anticipated local production.
India is likely to produce around 850,000 tonnes of natural rubber in 2010/11, down 4.8 percent from the earlier estimate, after heavy unseasonal rains affected tapping, a senior Rubber Board official said on Thursday.
India's Automotive Tyre Manufacturers' Association has estimated India's 2010/11 tyre production to rise to a record 121.4 million units as companies boost capacity to meet booming demand from the local auto industry.



India’s Natural-Rubber Deficit to Surge, Bloomberg Reports

By Supunnabul Suwannakij and Thomas Kutty Abraham
Dec. 3 (Bloomberg) -- A natural-rubber shortage in India,
the world’s biggest consumer after China, may surge almost five
times over the next decade as rising incomes boost demand for
tires, according to an industry group.
The deficit may increase to 840,000 metric tons in 2020
from 175,000 tons next year, Vinod Simon, president of the All
India Rubber Industries Association, said in an interview. In
2015, the shortfall may be 687,000 tons, Simon said.
The forecast underscores India’s rising consumption of
commodities as economic growth stokes consumer demand and the
government boosts infrastructure spending. India’s commodity
demand has reached a tipping point, and growth is set to
accelerate significantly, Barclays Capital said last month.
The rubber deficit may stay longer than we imagine as car
sales continue to rise and a growing population boosts demand
for health care products, Anand James, chief analyst at
brokerage Geojit Comtrade Ltd., said from Kochi, Kerala.
The stronger consumption in India may help sustain this
year’s 34 percent rally in yen-priced futures. The contract on
the Tokyo Commodity Exchange, which reached a 30-year high of
383 yen ($4.57) per kilo on Nov. 11, traded at 370.4 yen today.
In India, spot prices in Kerala rose last month to more than 200
rupees ($4.43) a kilo for the first time. The Thai cash price
surged to an all-time high today of 134.05 baht ($4.46) a kilo.

‘Still Be There’

The increasing population of India will drive the market
for rubber products, Simon said yesterday from Bangkok,
capital of the largest rubber producer and exporter, where he’s
attending a conference. Shortage will still be there.
Rubber consumption may climb to 1.89 million tons in 2020,
compared with 930,000 tons this year if the economy expands at
8.5 percent a year, Simon said. The South Asian nation’s economy
grew 8.9 percent for a second straight quarter in July to
September, a government report showed on Nov. 30.
India may expand faster than China in the next 10 years if
the government boosts spending on roads and bridges and lifts
investment curbs, New York University professor Nouriel Roubini
said yesterday. China is likely to slow in the coming years
gradually and India’s growth is likely to accelerate, boosted
by a young population and higher consumption, Roubini said.

‘Through the Roof’

India’s Trade Secretary Rahul Khullar said this week that
rubber demand is going through the roof, and local output
from the world’s fourth-largest producer wasn’t going to expand
dramatically. The government may allow imports of as much as
100,000 tons at a lower duty to help meet demand, Khullar said.
India’s rubber output totaled 88,500 tons in November,
compared with 93,500 tons a year ago, according to figures from
the state-run Rubber Board. Imports in the eight months to Nov.
30 totaled 143,468 tons from 139,321 tons as tire companies
stepped up purchases, the board said.
Rubber will remain a sellers’ market, as it has been in
the past two to three years, as the demand-supply equation is
unlikely to change soon, James said. Thailand, Malaysia and
Indonesia are the top three producers. Natural-rubber supply
this year may total 9.5 million tons, according to the
Association of Natural Rubber Producing Countries, whose members
account for 92 percent of worldwide output.
Demand from India’s auto industry is expected to increase
substantially in the coming years after investments by tire
makers including Bridgestone Corp. and Michelin & Cie., said
Simon. Annual car sales may double to 3 million by 2015,
according to a projection from India’s government.
Bridgestone and Indian rivals including Apollo Tyres Ltd.
and MRF Ltd. are investing $3 billion in plants to meet demand
that’s forecast by Automotive Tyre Manufacturers’ Association to
expand 10 percent to 106 million tires in the year to March 31.
Rubber makes up 42 percent of raw-material costs, according to
the manufacturers’ group.